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Healthcare august2013-130926012431-phpapp01

1.
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2.
Impressive growth
prospects
• Indian healthcare sector, one of the fastest growing industry, is expected to advance at a
CAGR of 15 per cent during 2011–17 to reach USD158 billion. There is immense scope
for enhancing healthcare services penetration in India, this presents ample opportunity for
development of the healthcare industry
Strong fundamentals
• Rising income levels, ageing population, growing health awareness and changing attitude
towards preventive healthcare is expected to boost healthcare services demand in future
Cost advantage
• The low cost of medical services has resulted in a rise in the country’s medical tourism,
attracting patients from across the world. Moreover, India has emerged as a hub for R&D
activities for international players due to its relatively low cost of clinical research
Favourable investment
environment
• Conducive policies for encouraging FDI, tax benefits, favourable government policies
coupled with promising growth prospects have helped the industry attract private equity,
venture capitals and foreign players

3.
• The engineering sector is delicensed;
100 per cent FDI is allowed in the
sector
• Due to policy support, there was
cumulative FDI of USD14.0 billion into
the sector over April 2000 – February
2012, making up 8.6 per cent of total
FDI into the country in that period
Growing demand
Source: KPMG, Hospital Market – India by Research on India, Frost & Sullivan, LSI Financial Services, Aranca Research
Notes: NRHM – National Rural Health Mission, R&D – Research and Development, CAGR - Compound Annual Growth Rate, USD – US Dollar
Strong demand
• Healthcare revenue in India is set
to reach USD158 billion by 2017;
expenditure is likely to expand at a
CAGR of 15 per cent over 2012–
17
• Rising incomes, greater health
awareness, lifestyle diseases and
increasing access to insurance
will contribute to growth
Attractive opportunities
• Investment in healthcare
infrastructure is set to rise,
benefiting both ‘hard’ (hospitals)
and ‘soft’ (R&D, education)
infrastructure
• Medical tourism is emerging as
one of the most lucrative
investment areas in the country
Policy support
• The government aims to develop
India as a global healthcare hub
• Policy support in the form of
reduced excise and customs duty,
and exemption in service tax
• Initiatives like NRHM would boost
healthcare in rural areas
Quality and affordability
• Availability of a large pool of well-
trained medical professionals in
the country
• India has an advantage over its
peers in the West and Asia in
terms of cost of high-quality
medical services offered
2011
Market
value:
USD68.4
billion
2017F
Market
value:
USD158.2
billion
Advantage
India

4.
Source: Hospital Market – India by Research on India, Aranca Research
Healthcare
Hospitals
Private Hospitals – It includes nursing homes, and mid-tier and
top-tier private hospitals
Pharmaceutical
Diagnostics
Medical
Equipment and
Supplies
Medical
Insurance
Government Hospitals – It includes healthcare centres, district
hospitals and general hospitals
It includes manufacture, extraction, processing, purification and
packaging of chemical materials for use as medications for
humans or animals
It comprises businesses and laboratories that offer analytical or
diagnostic services, including body fluid analysis
It includes establishments primarily manufacturing medical
equipment and supplies, e.g. surgical, dental, orthopaedic,
ophthalmologic, laboratory instruments, etc
It includes health insurance and medical reimbursement facility,
covering an individual’s hospitalisation expenses incurred due
to sickness

7.
Shares in healthcare spending in India, 2005
Source: Grant Thornton, LSI Financial Services, Aranca Research
The private sector has emerged as a vibrant force in India’s healthcare industry, lending it both national and international
repute
Private sector’s share in healthcare delivery is expected to increase from 66 per cent in 2005 to 81 per cent by
2015
Private sector’s share in hospitals and hospital beds is estimated at 74 per cent and 40 per cent, respectively
Shares in healthcare spending in India, 2015
34%
26%
14%
26%
Government
hospital
Top tier
Mid tier
Nursing home
19%
40%
11%
30%
Government
hospital
Top tier
Mid tier
Nursing home

10.
Shift from
communicable to
lifestyle diseases
• With increasing urbanisation and problems related to modern-day living in urban settings,
currently, about 50 per cent of spending on in-patient beds is for lifestyle diseases; this
has increased the demand for specialised care
Expansion to tier-II and
tier-III cities
• There is substantial demand for high-quality and speciality healthcare services in tier-II
and tier-III cities
• To encourage the private sector to establish hospitals in these cities, the government has
relaxed the taxes on these hospitals for the first five years
Management contracts
• Many healthcare players such as Fortis and Manipal Group are entering management
contracts to provide an additional revenue stream to hospitals
Source: IRDA, CII, Grant Thornton, Gartner, Technopak, Aranca Research
Note: PPP is Public – Private Partnerships; GOI is Government of India; ICT is Information and Communications Technology;
Management Contracts - An arrangement under which operational control of an enterprise is given to a separate entity for a fee
Emergence of
telemedicine
• Telemedicine is a fast-emerging sector in India; many major hospitals (Apollo, AIIMS,
Narayana Hrudayalaya) have adopted telemedicine services and entered into a number of
PPPs
• In 2012, the telemedicine market in India was valued at USD7.5 million, and is expected to
rise at a CAGR of 20 per cent, to USD18.7 million by 2017
• Telemedicine can bridge the rural-urban divide in terms of medical facilities, extending
low-cost consultation and diagnosis facilities to the remotest of areas via high-speed
internet and telecommunication

11.
Increasing penetration
of health insurance
• Health insurance is gaining momentum in India; gross healthcare insurance premium is
expanding at a CAGR of 39 per cent over FY06–10
• This trend is likely to continue, benefitting the country’s healthcare industry
Mobile-based health
delivery
• Strong mobile technology infrastructure and launch of 4G is expected to drive mobile
health initiatives in the country
• Currently, there are over 20 mhealth initiatives in the country for spreading awareness
about family planning and other ailments
• Mobile health industry in India is expected to reach USD0.6 billion by 2017
Source: IRDA, CII, Grant Thornton, Gartner, Technopak, PwC, Aranca Research
Note: PPP is Public – Private Partnerships; GOI is Government of India; ICT is Information and Communications Technology;
Management Contracts - An arrangement under which operational control of an enterprise is given to a separate entity for a fee
Technological initiatives
• To standardise the quality of service delivery, control cost and enhance patient
engagement, healthcare providers are focussing on the technological aspect of healthcare
delivery
• Digital Health Knowledge Resources, Electronic Medical Record, Mobile Healthcare,
Electronic Health Record, Hospital Information System and PRACTO are some of the
technologies gaining wide acceptance in the sector
• Healthcare sector’s spending on IT products and services is expected to rise from USD53
billion in 2012 to USD57 billion in 2013

13.
Trends in per capita income in India (USD)
Source: IMF, World Bank Data, Aranca Research
Notes: E – Estimates; F – Forecasts
Rising incomes mean a steady growth in the ability to
access healthcare and related services
Per capita income is expected to increase at a
CAGR of 5.7 per cent over 2012–18
Per capita expenditure on healthcare in India in
2011 was USD58
Changing demographics has also contributed to greater
healthcare spending; this is likely to continue with the size
of the elderly population set to rise from the current 96
million to about 168 million by 2026
-5%
0%
5%
10%
15%
20%
25%
30%
0
500
1,000
1,500
2,000
2,500
2001 2003 2005 2007 2009 2011 2013F 2015F 2017F
Per Capita income, USD, LHS Annual growth rate, RHS

15.
Indian health insurance market size (USD million)
Source: IRDA, Towers Watson Aranca Research
Note: CAGR – Compounded Annual Growth Rate
The health insurance industry expanded at a CAGR of 33.0
per cent in FY06–12; the fast pace of growth is expected to
continue in the coming years
The share of population having medical insurance is likely
to rise to 20 per cent by 2015 from the present 2 per cent
With increasing number of companies offering insurance
cover to their employees, the healthcare insurance business
in India is set to expand further
502
709
1,274
1,443
1,752
2,459
2,774
FY06 FY07 FY08 FY09 FY10 FY11 FY12
CAGR: 33.0%

16.
Cost of surgeries in different countries (USD)
Source: Ministry of Health, RNCOS, KPMG, LSI Financial Services,
Apollo Investor Presentation, August 2012 Aranca Research
Presence of world-class hospitals and skilled medical
professionals has strengthened India’s position as a
preferred destination for medical tourism
The growth in the sector is underscored by the cost
advantage that India provides to patients from developed
countries. Notably, India also attracts medical tourists from
developing nations due to lack of advanced medical
facilities in many of these countries
Medical tourism market is expected to expand at a CAGR of
27 per cent to reach USD3.9 billion in 2014 from USD1.9
billion in 2011
Inflow of medical tourists is expected to cross 320 million by
2015 compared to 85 million in 2012
Yoga, meditation, ayurveda, allopathy and other traditional
methods of treatment are major service offerings that attract
medical tourists from European nations and the Middle East
to India
-
50,000
100,000
150,000
200,000
250,000
300,000
Heart surgery Bone marrow
transplant
Liver transplant Knee
replacement
US UK Thailand Singapore India

17.
Market size
• The traditional (ayurvedic) medical care market in India was valued at about USD1.4
billion in 2010, and this is expected to rise at a CAGR of 20 per cent over 2011–15
Services offered
• Ayurvedic medicines offer traditional Indian health remedies based on natural and herbal
ingredients
• The sector has broadened its offerings and now includes services on diet and nutrition,
yoga, herbal medicine, humour therapy and spa
Source: Ministry of Health, RNCOS, KPMG, Aranca Research
Leading brands and
players
• Vicks VapoRub, Amrutanjan Balm, Zandu Balm, Moov Pain Cream and Halls Lozenges
are among the leading ayurvedic brands in India
• Many big players such as Apollo, VLCC and Manipal Group are also setting up wellness
centres across India, with traditional healthcare remedies as the focus of their offerings
Notable trends
• The traditional medical sector is developing Traditional Knowledge Digital Library to
prevent companies from claiming patents on such remedies
• There is growing interest from numerous private equity firms in the traditional healthcare
sector in India

18.
Share of private sector in total health expenditure,
2009
Source: WHO World Health Statistics 2012, Aranca Research
Rising incomes have led to greater affordability for superior
quality healthcare facilities in the private sector
In India, private healthcare accounts for almost 74 per cent
of the country’s total healthcare expenditure
Private players have been constantly innovative in their
efforts to provide better healthcare services to a wider
customer base
Some are trying to combine traditional healthcare
practices with conventional systems to create new
avenues for their businesses
36.6%
47.5%
56.4%
73.8%
Russia China Brazil India

19.
Market size of private hospitals (USD billion)
Source: WHO Statistical Information System, Yes Bank, Aranca Research
Note: E-estimates
The hospital market in India is estimated at USD54.7 billion
at end-of 2012, with the private sector accounting for 82 per
cent
Over 2009–12, the market size of private hospitals is
estimated to have increased at a CAGR of 26.9 per cent
Increase in number of hospitals in Tier-II and Tier-III cities
has fuelled the growth of private sector
22.0
29.9
35.4
45.0
2009 2010E 2011E 2012E
CAGR: 26.9%

20.
Proposed budget allocation for Departments of Ministry of
Health and Family Welfare under 12th Plan (USD billion)
Source: Planning Commission, Ministry of Health & Family Welfare, Aranca Research
Notes: AYUSH - Department of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy
The Planning Commission has allocated USD55 billion under the 12th Five-Year Plan to the Ministry of Health and Family
Welfare, which is about three times the actual expenditure under the 11th Five-Year Plan
The share of healthcare in total plan allocation is set to rise to 2.5 per cent of GDP in the 12th Plan from 0.9 per cent in
the 11th Plan
The 12th plan focusses on providing universal healthcare, strengthening healthcare infrastructure, promoting R&D and
enacting strong regulations for the healthcare sector
Budget allocation for Departments of Ministry of Health
and Family Welfare under 11th Plan (USD billion)
49.4
1.8
1.8
2.1
Department of
Health and Family
Welfare
AYUSH
Department of
Health Research
Aids Control
18.4
0.70.4
0.3
Department of
Health and Family
Welfare
AYUSH
Department of
Health Research
Aids Control

21.
Encouraging the private
sector
• The benefit of section 10 (23 G) of the IT Act has been extended to financial institutions
that provide long-term capital to hospitals with 100 beds or more
• Government is encouraging the PPP model to improve availability of healthcare services
and provide healthcare financing
Encouraging
investments in rural
areas
• The benefit of section 80-IB has been extended to new hospitals with 100 beds or more
that are set up in rural areas; such hospitals are entitled to 100 per cent deduction on
profits for five years
Source: Union Budget FY13,Health Ministry, Aranca Research
Tax incentives
• Customs duty on life-saving equipment has been reduced to 5 per cent from 25 per cent
and exempted from countervailing duty
• Import duty on medical equipment has been reduced to 7.5 per cent
Incentives in the
medical travel industry
• Incentives and tax holidays are being offered to hospitals and dispensaries providing
health travel facilities

22.
Union Budget FY14
• Ministry of Health and Family Welfare allocated USD6.9 billion, an increase of 21 per cent
from FY13
• Creation of new National Health Mission (NHM) for providing effective healthcare to both
urban and rural population, with emphasis on states with weak health infrastructure and
indicators
• NHM extended to encompass Ayurveda, Unani, Siddha and Homeopathy to strengthen
traditional medical forms
• Scope of Rashtriya Swasthya Bima Yojana (RSBY) enhanced to include rickshaw pullers,
taxi drivers, sanitation workers, rag pickers and mine workers
• Fund allocation to provide accessible and affordable services to elderly under National
Programme for the Health Care of Elderly
• Allocation of USD875.4 million for improving medical education, training and research
Source: Union Budget FY14, Aranca Research

24.
Source: Healthcare Outlook “A Quarterly Report By Technopak” Feb 2007, Aranca Research
India’s primary comparative advantage lies in its–
Large pool of well-trained medical professionals in the country
Cost advantage compared to peers in Asia and Western countries
Cost of surgery in India is one-tenth of that in the US or Western Europe
Increased success rate of Indian companies in getting Abbreviated New Drug Application (ANDA) approvals
The country offers vast opportunities in R&D as well as medical tourism
Opportunities for Investments in Healthcare
Diagnostic & Pathology
Services
High cost differential in India allows for outsourcing of pathology and laboratory tests by foreign
hospital chains
Clinical Trials
India offers both a huge patient pool, favourable regulatory environment and cost advantage for
conducting clinical trials
Health Insurance
Less than 15 per cent of the Indian population is covered by any kind of health insurance; this
provides significant opportunity to a new player in the health insurance market
Telemedicine Provides access to better quality healthcare in rural areas

28.
Source: Company website, Company Reports, Aranca Research
Note: IFC - International Finance Corporation, NABH - National Accreditation Board for Hospitals & Healthcare; R&D - Research & Development
1998 1999 2000 2002 2004 2006 2008 2010 2011 2012 2013
Expansion of
hospital network
in Bengaluru and
Chennai
Acquisition of
Tamilnad Hospital in
2007 for transforming
it to Global Health City
1998
First hospital
opened in
Hyderabad
Operational
excellence,
inclusion of more
service offerings
aided growth
2010
Global Health City
received NABH
accreditation
Proposed IFC
investment to
enhance bed capacity
to 1,800 by FY2016
2013
Current capacity
of about 2,173
beds
First hospital to carry out
intravascular surgery
First hospital to perform
radial procedures
First hospital to be
recognised for R&D by
Govt. of India
Leading multi-organ
transplant centre
Completed highest radial
procedures in India
2013 and beyond:
Expansion in
metropolitan and
Tier I & II cities

29.
Source: Research on India, Aranca Research
1983 1986 1989 1992 1995 1998 2002 2008 2012
Network of 29
hospitals, including
12 satellite with
capacity of 3,280
beds
Started
Fortis International
Institute of Medical
Sciences, a major
educational institution
with international
standards
2013
73 healthcare
facilities and
around
12,000 beds
Completed
acquisition of
Wockhardt Hospitals
Ltd, adding 10 more
hospitals
Fortis is coming up
with two multi-
speciality hospitals
and a medical
college for 500
students
Plans to add 4,300
new beds in next
four years
Completed
acquisition of ~75 per
cent stake in SRL
Current network
Higher profitability
Acquisitions
Diversification
Hospital expansion

31.
Notes: Industry Estimates
Healthcare infrastructure
• Additional 1.8 million beds
needed for India to achieve
the target of 2 beds per
1,000 people
by 2025
• Additional 1.54 million
doctors required to meet
the growing demand for
healthcare
• Investment of USD86 billion
required to achieve these
targets
Research
• Contract research is a fast
growing segment in the
Indian healthcare industry
• Cost of developing new
drug is as low as 60 per
cent of the testing cost in
the US
• About 60 per cent of global
clinical trials is outsourced
to developing countries
Medical tourism
• The Indian medical tourism
industry is poised to grow
at 30 per cent annually into
a USD2 billion business by
end-2012
• Cost of surgery in India is
nearly one-tenth of the cost
in developed countries

32.
Healthcare spending as a percentage of
GDP (2009)
Source: WHO World Health Statistics 2012, E&Y, LSI Financial Services,
Aranca Research
Huge scope for enhancing healthcare services considering
that healthcare spending as a percentage of GDP
Rural India, which accounts for over 70 per cent of
population and is set to emerge as a potential demand
source
Only 3 per cent of specialist physicians cater to rural
demand
Vast opportunities for investment in healthcare infrastructure
in both urban and rural India
About 1.8 million beds required by the end of 2025
Additional 1.54 million doctors and 2.4 million nurses
required to meet the growing demand
9.4%
4.6%
World India
Health infrastructure per 10,000 individual (2009)
Physicians
Nurses and
midwifery personnel
Hospital
beds
India 6.5 10.0 9.0
World
median
14.5 28.1 30.0

33.
Health insurance premium collection
(USD billion)
Source: Hospital Market India – By Research on India, LSI Financial Services, Aranca Research
Less than 15 per cent of the Indian population is covered
through health insurance
Increasing healthcare cost and burden of new diseases
along with low government funding is raising demand for
health insurance coverage
Many companies offer health insurance coverage to
employees, driving market penetration of insurance players
The share of population having medical insurance is likely
to rise to 20 per cent by 2015 from the present 2 per cent
1.1
1.45
3.0
2007-08 2008-09 2011-12E
 With increasing demand for affordable and quality healthcare, penetration of health insurance is poised to grow
exponentially in the coming years
 Medical insurance is estimated to become a USD3-billion industry by the end of 2012
 Health insurance premiums are expected to increase at a CAGR of 30 per cent during 2012–14
CAGR: 27.0%

38.
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by Aranca in consultation with IBEF.
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presentation to ensure that the information is accurate to the best of Aranca and IBEF’s knowledge and belief, the
content is not to be construed in any manner whatsoever as a substitute for professional advice.
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